Dollar stores are growing like food retailers in the United States

Tufts University researchers found that dollar stores are now the fastest-growing grocery retailer in the contiguous United States — and they’ve doubled their share in rural areas. The households that have more purchases at dollar stores tend to be lower-income and headed by people of color. The results were published on January 19 in American Journal of Public Health.

The study, which the researchers believe is the first to look in this direction over the past 10 years, could have meaningful implications for nutrition policy. Food and beverages stocked by dollar stores are usually lower in nutrients and higher in calories, while only a small percentage of these stores carry fresh produce and meat. Their growing footprint, particularly in the remote South, is also significant: these areas already have higher baseline levels of obesity and food insecurity.

Dollar stores are playing an increasingly important role in purchasing household staples, but the search for them is lacking. Many local areas have instituted policies such as zoning laws intended to slow the expansion of dollar stores even though we don’t fully understand the role they play,” Wenhui Fengthe paper’s first author and Professor of Health Care Policy at Tufts University and Adjunct Professor of Public Health and Community Medicine at the University of Michigan Tufts University School of Medicine. “Our study is one of the first to use nationally representative data to investigate the role of dollar stores at the household level.”

Rural trips aroused researchers’ interest in the subject. While completing her doctoral program, Feng vacationed around the United States, traveling the remote highways dotted with dollar stores.

“It was amazing to see this type of business taking over many of the areas I visited. I was intrigued,” says Feng.

Sean CashBergstrom Foundation Professor of Global Nutrition and Associate Professor Friedman School of Nutrition Science and PolicyHe had a similar experience visiting his small hometown in upstate New York, where he noticed residents crowding into the local dollar store for groceries.

Their new research confirms the anecdotes. Husband, co-author Elena T From the USDA Economic Research Service, I analyzed how Americans use dollar stores to access food by analyzing food purchase data from IRI Consumer Network, a nationally representative panel of nearly 50,000 households. The data compiled purchases from 2008 through 2020. It painted a provocative picture of nutritional divides, with households headed by people of color, rural households, and low-income households increasingly dependent on dollar stores.

Tufts University researchers found that in general, as people’s incomes go up, they spend less than their budget at dollar stores. But they also found that in rural and low-income areas, people spend, on average, more than five percent of their food budget at dollar stores. Especially, Rural non-Hispanic black households spend 11.6 percent of their food budgets at dollar stores. Southern rural households also spend in large numbers.

“The South is a hot spot,” says Cash, a food economist and senior writer for the paper. The dollar store business model originated in the South. They have more distribution centers there, and consumers there have supported that growth.”

It’s a remarkable development: Dollar Stores previously focused primarily on personal care products and crafts. Now, they’re expanding to offer pre-packaged, shelf-stable food items. These items may be convenient, but they often have suboptimal nutritional value.

“When you start to look at race and ethnicity, there are some egalitarian implications in terms of people’s access to healthy food,” says Feng.

While dollar stores tend not to specialize in fresh food and produce, they fill a void that can’t be ignored, especially for people who live in remote areas. In some ways, their rise is actually a positive development, providing consumers with food options in hard-to-reach areas. On the other hand, recent growth in food dollar spending raises concerns that such stores may force local groceries through competitive pricing, the researchers write — leaving consumers with limited and less healthy choices.

The two plan to focus on health and nutritional outcomes in the future, highlighting the types of food commonly purchased at dollar stores. “We are now working on a study to see how healthy foods purchased at dollar stores are compared to other retail outlets,” says Feng.

Meanwhile, the pair are excited to be at the forefront of the burgeoning search. They recently hosted a Tufts Workshop on Food Access, which attracted researchers from across the country. They discuss the impact of dollar store expansion on food access, the relationship between dollar stores and obesity, shopping patterns during the COVID-19 pandemic, and more.

While dollar stores may be ready to step in on food policy, the pair is keen to point out that dollar stores likely won’t be outperforming supermarkets anytime soon.

“Our data clearly shows that dollar stores are the fastest growing form of food dollar in terms of share. At the same time, even in the hardest-hit groups in terms of income, ethnicity, and geographic demographics, the share is still 10 percent or less,” says Cash.